Winning The Commercial Real Estate Game

The game of​ commercial real estate can be won in​ many ways. It’s more of​ an​ essay test than true or​ false. There’s definitely more than one correct answer. a​ large percentage of​ the​ world’s millionaires earned their wealth through real estate investment. While nothing is​ a​ sure thing, real estate offers many opportunities for​ the​ savvy investor. Whether you want to​ build wealth or​ simply maintain it, there are several strategies that you can implement to​ get where you want to​ be. Where should you begin? You don’t want to​ put your hard earned money into a​ dead market. You want to​ protect what you’ve worked so hard for. Let’s look at​ a​ few of​ the​ more popular methods for​ investing in​ commercial real estate.

One of​ the​ more classic approaches to​ commercial real estate investment is​ the​ buy and​ hold strategy. in​ this maneuver, you buy property that is​ valued at​ a​ fair price. it​ may be a​ few miles away from town or​ outside of​ a​ development area. You then simply hold the​ land for​ a​ number of​ years. While you do this, the​ city comes to​ you. Developments are going up all around you. Yours is​ the​ last piece of​ raw land around and​ every developer in​ the​ state wants a​ piece of​ it. You, the​ genius entrepreneur, then sell the​ land for​ millions more than you pay for​ it. it​ couldn’t get much better than this. While this is​ obviously the​ ideal scenario, it​ can work like this. as​ you know, land is​ the​ only commodity that they don’t produce any more of. Therefore the​ price of​ your land will eventually go up.

While there is​ a​ great deal of​ money to​ be made in​ this sort of​ venture, it​ can take a​ long time to​ mature. This is​ great for​ someone who has a​ big chunk of​ money that they want to​ sit on for​ a​ few years. There is​ no set time limit as​ to​ how long it​ will take you to​ win. You basically have to​ go with your gut on this one. Should you sell it​ five years from now for​ twice what you paid for​ it? What if​ in​ year six, Wal-Mart wants to​ move in​ and​ pay you 10 times what you paid? There is​ really no way to​ know. You have to​ get out when you feel the​ time is​ right. Look for​ the​ signs around you. if​ the​ trends of​ development in​ your area are coming towards you, wait for​ a​ while. if​ you’ve had the​ land for​ ten years and​ the​ city that you just knew would be the​ next boomtown turned into a​ ghost town, you might want to​ get out. This strategy can produce a​ great return and​ it’s a​ pretty passive source. You don’t really have to​ do anything except buy the​ land and​ wait.

Another great way to​ invest in​ commercial property is​ through the​ rehab market. This is​ where you buy a​ run-down property that needs a​ lot of​ work done. You fix it​ up with a​ little elbow grease. Then after it’s up to​ par, you put it​ back on the​ market and​ make a​ tidy profit. This is​ a​ growing segment in​ the​ real estate industry. There is​ a​ definite need for​ this as​ property is​ always getting old. the​ most important thing to​ remember in​ this type of​ venture is​ you make your money when you buy the​ property, not when you sell it.

You must find properties that are undervalued. if​ you overpay, no matter what you do to​ the​ property, you’ll still come out behind. You need to​ find properties that need a​ lot of​ work. This has the​ highest potential for​ a​ great return. Don’t get involved with a​ property that just needs a​ new coat of​ paint and​ the​ yard mowed. This will not make you any money. in​ fact, you’ll most likely lose money. Stick with the​ properties that need the​ most TLC and​ you’ll come out on top.

Another popular strategy is​ that of​ quick turning a​ property. This involves finding distressed properties. You search for​ a​ great deal that is​ extremely undervalued. This could be a​ property that is​ facing foreclosure or​ a​ bankruptcy. Someone may take a​ significant cut in​ the​ price in​ order to​ get out fast. This can benefit you, the​ investor, greatly. You then take the​ distressed property and​ put it​ back on the​ market quickly. Since you don’t have to​ sell quickly, the​ property will get fair market value and​ you can make thousands of​ dollars in​ profit. as​ with rehabbing property, the​ key is​ finding cheap properties that you know are worth more. This is​ where all of​ the​ money comes from in​ this type of​ transaction. if​ you know the​ market, you can do very well with this type of​ deal.

For investors that already have a​ good sum of​ money saved up, there is​ another form of​ investment that is​ very appealing. Professionals who want another steady income can invest in​ expensive real estate that is​ already a​ great performing asset. This could be a​ luxury apartment complex or​ condos or​ any number of​ properties. the​ investor then takes over the​ cash flow that is​ generated by the​ subject property. They will most likely leave the​ existing property management in​ place and​ just take the​ steady cash flow. This is​ a​ great form of​ investment for​ those that are looking for​ a​ passive source of​ income from their investment. People who would benefit from this are usually very busy and​ already successful in​ some other walk of​ life. They understand that the​ only way to​ create wealth is​ through multiple sources of​ income. Diversification is​ the​ key.